Question : Figure 4-16 11) Refer to Figure 4-16.  Suppose the market initially : 1387468

Figure 4-16

11) Refer to Figure 4-16.  Suppose the market is initially in equilibrium at price P1 and now the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? For demand curve D1

A) the producer bears a greater share of the tax burden if the supply curve is S2.

B) the producer bears a greater share of the tax burden if the supply curve is S1.

C) the producer’s share of the tax burden is the same whether the supply curve is S1 or S2.

D) the producer bears the entire burden of the tax if the supply curve is S1 and the consumer bears the entire burden of the tax if the supply curve is S2.

12) Refer to Figure 4-16.  Suppose the market is initially in equilibrium at price P1 and now the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? For demand curve D1,

A) the producer bears a smaller share of the tax burden if the supply curve is S2.

B) the producer bears a smaller share of the tax burden if the supply curve is S1.

C) the producer’s share of the tax burden is the same whether the supply curve is S1 or S2.

D) the producer bears the entire burden of the tax if the supply curve is S2 and the consumer bears the entire burden of the tax if the supply curve is S1.

Figure 4-17

13) Refer to Figure 4-17. Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?

A) The consumer will bear a smaller share of the tax burden if the demand curve is D1.

B) The consumer’s share of the tax burden is the same whether the demand curve is D1 or D2.

C) The consumer will bear a smaller share of the tax burden if the demand curve is D2.

D) The consumer will bear the entire burden of the tax if the demand curve is D2 and the producer will bear the entire burden of the tax if the demand curve is D1.

14) Refer to Figure 4-17. Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?

A) The consumer will bear a greater share of the tax burden if the demand curve is D1.

B) The consumer’s share of the tax burden is the same whether the demand curve is D1 or D2.

C) The consumer will bear a greater share of the tax burden if the demand curve is D2.

D) The consumer will bear the entire burden of the tax if the demand curve is D1 and the producer will bear the entire burden of the tax if the demand curve is D2.

15) Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?

A) The supply curve for cases of beer would shift to the right by $1.

B) The supply curve for cases of beer would shift to the left by more than $1.

C) The supply curve for cases of beer would shift to the left by less than $1.

D) The supply curve for cases of beer would shift to the left by $1.

16) Suppose that in Canada, the government places a $1,500 tax on the buyers of new snowmobiles. After the purchase of a new snowmobile, a buyer must pay the government $1,500. How would the imposition of the tax on buyers be illustrated in a graph?

A) The tax will shift the supply curve to the left by $1,500.

B) The tax will shift the demand curve to the right by $1,500.

C) The tax will shift both the demand and supply curve to the right by $1,500.

D) The tax will shift the demand curve to the left by $1,500.

17) When Congress passed a law that imposed a tax designed to fund its Social Security and Medicare programs it wanted employers and workers to share the burden of the tax equally. Most economists who have studied the incidence of the tax have concluded

A) the tax is not high enough to cover the future costs of Social Security and Medicare.

B) the tax on employers is too high because it reduces the employment of low-skilled workers.

C) the burden of the tax falls almost entirely on workers.

D) the tax rate should be greater for high income workers than for low income workers.

18) The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

A) employers only

B) workers only

C) employers and workers

D) the unemployed

19) When the government taxes a good or service, it

A) affects the market equilibrium for that good or service.

B) eliminates the deadweight loss associated with the good or service.

C) increases consumer surplus for the good or service.

D) increases producer surplus for the good or service.

20) Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller. Why, then, are gasoline and cigarette taxes imposed on sellers?

A) Sellers are more honest than buyers.

B) The demand for both gasoline and cigarettes is very elastic.

C) The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers.

D) It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected.